On June 30, 2018, Atlas, Inc

question 13

Essay

On June 30, 2018, Atlas, Inc. leased a warehouse facility from LT Leasing Corporation. The lease agreement calls for Atlas to make semiannual lease payments of $1,688,721 over a three-year lease term, payable each June 30 and December 31, with the first payment at June 30, 2018. Atlas's incremental borrowing rate is 10%, the same rate LT uses to calculate lease payment amounts. The fair value of the warehouse is $9 million. LT recently purchased the warehouse for $9 million
-Required:
Amortization is recorded on a straight-line basis at the end of each fiscal year. Round your answers to the nearest whole dollar amounts.
1. Determine the present value of the lease payments at June 30, 2018 (to the nearest $000) that Atlas uses to record the right-of-use asset and lease liability.
2. What amounts related to the lease would Atlas report in its balance sheet at December 31, 2018? (Ignore taxes.)
3. What amounts related to the lease would Atlas report in its income statement for the year ended December 31, 2018? (Ignore taxes.)

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